I have noticed more and more schools quite willing to share their non contribution towards the legally required Pension and Health Insurance. For example, there was one school advertised today quite clear suggesting that there was no health or insurance contributions as they were an independent contract offered. How long will these schools get away with this blatant theft?

"Because we offer an independent contract, pension and medical are not offered, therefore not deducted from our employee’s monthly pay. The only monthly deductions are taxes." (ESL Cafe)

I would recommend teachers not to contemplate to apply for this job. The school is pocketing their legally required contributions, you don't a potential pension refund upon leaving the country.

I have noticed more and more schools quite willing to share their non contribution towards the legally required Pension and Health Insurance. For example, there was one school advertised today quite clear suggesting that there was no health or insurance contributions as they were an independent contract offered. How long will these schools get away with this blatant theft?

Before the CDI apologists arrive, let me answer your question simply: Forever. They will get away with it forever or until the South Korean government gets serious about actually enforcing labor laws. In short: forever.

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"Because we offer an independent contract, pension and medical are not offered, therefore not deducted from our employee’s monthly pay.

It doesn't matter what they call you in the contract, but of course they're pulling the tried-and-true stunt of calling you "independent contractor." Well, that's a load of malarkey. What matters is the actual contracted relationship as evidenced by a few nifty things such as, who sets the hours, what is the management relationship, and are you free to simply transfer your services. Even a cursory glance at the contract will show that the actual relationship is that of employer-employee.

I transliterated the address in that post into Hangeul and plugged that into Daum's map site. I was suprised it didn't come back as CDI. It's for an outfit called "Sewoon and Simon English Academy". Actually, the address is for Se-un Yu-chi-weon, a kindegarten; I'll address that issue below. I'm going to guess it's either an outfit that just likes the name "Simon" or it's an international couple using their own names. If the latter, maybe--just barely maybe--they're unaware of the law, but I seriously doubt that. According to the Daum Map's little "information panel" function on that address, it's either affiliated with or used to do business as "ABC 영어아카데미". The road view on Daum didn't happen to show anything on the building showing who their franchiser is.

I'll also note that the location might look like two buildings, but it may in fact just be one building. The link you provided states that they have a new building so I'll go with it's two buildings. If it's two buildings with different addresses, then they're also having their employee violate immigration law unless they have Immigration's permission to be working at more than one location. It is kind of hard to tell sometimes if an edifice in Korea is one or two buildings, given the overlapping of the facades.

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I would recommend teachers not to contemplate to apply for this job. The school is pocketing their legally required contributions, you don't a potential pension refund upon leaving the country.

That's the beauty of the stunt as far as the employer is concerned: no outlay of pension or national health payments. The tax bit also helps to draw in the gullible, er, uninformed. They see a higher income, a smaller deduction, and think they're young, strong, invincincilbe, and mighty lucky. The last part is what they're counting on because if they're not lucky, they'll have nothing to show for their time in Korea after just one expensive hospitalization.

Your recommendation is falling on deaf ears, friend. Just look at how long the CDI class-action suit has been dragging on. Hey, people still sign up for Wonderland, right?

Yea, I see more of it lately. Actually, it has been going on for years. Maybe schools are just more up front, then years ago. Years ago t was lets see how long we can keep the wool pulled over the waygooks eyes.

There are good points and bad points with being an Independent Contractor. The thing that irks me is well many newbs and well lazy people get sucked into this. They are uninformed about the interdependent contractor and what it entails.

To make things worse the schools do not inform the employee of what is happening. They say they do not pay and leave unsaid that the responsibility of paying is the employees. So later on some teachers have to pay back pension and health insurance. Or even worse they risk going uninsured and get hurt and big medical bills.

It has always confused me. Well once aspect of it. I do understand cheapness and trying to save a buck. But sometimes the amount they are saving is minimal. I mean if a school can not afford that extra 150k won to 200k won they owe for health insurance, here is an idea lower the base wage to cover. Being cheap in this way does it really save the school money. A smart school could easily get that money out of a worker via work to cover costs. Or some people would go with a school if they just dealt honestly and some would do for less money.

I have said it before in another thread. The IC would be a good move, if the school actually treated the worker like an IC. In my perfect version of being an IC. The visa would accord with being an IC. The responsibilities are the teachers. The choices and freedom that come from being responsible are theirs too. If the school is not going to act like a sponsor, then the visa is not controlled/sponsored by them.

So, the school would give me pre-permission to work other places. No denial or refusal, well maybe a direct competition caveat. Next, since I am a contractor I have some control over schedule and holidays. The contract has to stipulate what EXACTLY my role and expectations are. Do not treat my like an IC and expect me to work like an employee. Not in the contract, not doable. "Sorry to hear you have extra new classes, but I am contracted at another place for that time". School also has to provide a third party held release letter.

At the present time it is perfectly legal to be an Independent Contractor as an E2 teacher in Korea.

There is no law or rule against it.

It is a matter of Tax Law, and neither Labor nor Immigration can change it.

Half of all Koreans work as self employed, independent contractors or employees of family businesses all under the provisions being called ICs in a not quite adequate English translation. It is unlikely that the Korean government will change the law to benefit a tiny group of E2 teachers, when it would cause massive economic disruption.

The state of Korean law in regard to ICs is similar to what it was in the US up until the late 1980s. There were no limitations based on having more than one place of work, working in an office, controlling your own hours or anything else. A full time secretary could work in an office with fixed hours and no benefits as an IC while sitting right next to a secretary with all the benefits and the same hours working as an employee - perfectly legal. The IRS worked for years from the late 80s with rule making and changes slowly tightening up who could be an IC, and yet hundreds of thousands of workers and thousands of businesses were "grandfathered" and were and still are legally able to continue with current and new IC workers under the old provisions. The destruction of hundreds of thousands of jobs is too high a price for instant change. Someday, Korea could begin to slowly alter the current law.

It is good to see that some schools that want to use ICs are being honest up front about it. They should also explain that if you take a job as an IC, you are legally required to report and pay for your own National Pension and National Health Insurance at the full rate and not just half. Then teachers can make an informed choice.

The correct income tax withholding rate, required by law, for an IC is 3.3% if you work over a minimum number of hours and pay level. In the end, the actual Income tax you have to pay will depend on filing a tax return, to pay additional tax due or receive a refund.

The correct income tax withholding rate for employees is according to the withholding calculator on the NTS website. Unless you make an unusually high income for a teacher, it will be around 2%. Korea has progressive rates from zero to 36% or so. Check the site linked in the FAX. Many schools - government, private and hogwans - and even many professional accountants in Korea are confused about the proper rate for E2 teachers working as employees. Check the NTS site.

Some teachers who are able to work multiple jobs, usually on F visas but included some ambitious E2 visa holders that I know personally, are able to work multiple jobs and come out way ahead as ICs.

For most teachers it is probably not a good option to be an IC if you can find a job as an employee. You would need substantially more pay to come out ahead.

In many cases, businesses can pay more, the worker can come out ahead and the business will still save money by using ICs - all done legally. It is not true that an employer that has ICs has to be making money by being dishonest, violating the law or cheating their workers. However some will cheat their ICs, just as some employers will cheat their employees.

As for CDI, my personal opinion is that it undesirable for other reasons for teachers, terrible for students (although still far better for students than any government school) and I would personally never work there nor recommend it. However, the lawsuit against them some years ago, which was mostly other issues unrelated to the IC issue, seems so far to have gone nowhere.

I willing chose to work as an IC. It has allowed my school to pay me a higher salary, putting more money in my pocket when is all said and done. My monthly withholding rate is only 3.3% (at my income my tax rate should be almost 10%) and, because I use an accountant to file my taxes, I pay only about 2.5% of my income in taxes each year.

I willing chose to work as an IC. It has allowed my school to pay me a higher salary, putting more money in my pocket when is all said and done. My monthly withholding rate is only 3.3% (at my income my tax rate should be almost 10%) and, because I use an accountant to file my taxes, I pay only about 2.5% of my income in taxes each year.

Boasting about your little tax fiddle again? If your tax rate 'should be almost 10%' then you should be paying almost 10%. If you aren't then you're either not declaring your income properly or your accountant is cooking the books. Even in the unlikely event that your accountant has discovered some amazing legal loophole nobody else knows about that enables people to pay a fraction of the money they are supposed to be paying, this is still tax avoidance. Do you think tax avoidance is cool? Do you think people who pay the correct amount of tax like me are suckers and mugs? Does it make you feel like a big man bragging about denying the government the money they need for essential services?

You need to grow up.

Last edited by edwardcatflap on Sat Feb 16, 2013 7:49 pm; edited 1 time in total

I willing chose to work as an IC. It has allowed my school to pay me a higher salary, putting more money in my pocket when is all said and done. My monthly withholding rate is only 3.3% (at my income my tax rate should be almost 10%) and, because I use an accountant to file my taxes, I pay only about 2.5% of my income in taxes each year.

Boasting about your little tax fiddle again? If your tax rate 'should be almost 10%' then you should be paying almost 10%. If you aren't then you're either not declaring your income properly or your accountant is cooking the books. Even in the unlikely event that your accountant has discovered some amazing legal loophole nobody else knows about that enables people to pay a fraction of the money they are supposed to be paying, this is still tax avoidance. Do you think tax avoidance is cool? Does it make you feel like a big man bragging about denying the government the money they need for essential services?

You need to grow up.

No book cooking going on here, Edward, as I've explained to you before. Why would you NOT want to reduce the amount of taxes you pay? Please explain that.

As for needing to grow up, I'll just say that I don't feel the need to comment about some aspect of you every time you make a post, even if it is not related to the topic at hand. Some people don't feel this way, apparently.

No book cooking going on here, Edward, as I've explained to you before. Why would you NOT want to reduce the amount of taxes you pay? Please explain that.

I could try answering that question seriously and talk about fairness and responsibility and playing your part in society etc.. but I really think it'd be lost on you.

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As for needing to grow up, I'll just say that I don't feel the need to comment about some aspect of you every time you make a post, even if it is not related to the topic at hand. Some people don't feel this way, apparently.

I don't come on here repeatedly boasting about certain activities that people feel strongly about. Tax avoidance/evasion really winds me up and I will always comment on posters like you who seem to be promoting it as a cool thing to do.

you clowns who brag about how good it is to have IC status (or your friends if you're in a coma etc) better not be coming around the first time you get seriously ill etc begging for money because you don't have health insurance

No book cooking going on here, Edward, as I've explained to you before. Why would you NOT want to reduce the amount of taxes you pay? Please explain that.

I could try answering that question seriously and talk about fairness and responsibility and playing your part in society etc.. but I really think it'd be lost on you.

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As for needing to grow up, I'll just say that I don't feel the need to comment about some aspect of you every time you make a post, even if it is not related to the topic at hand. Some people don't feel this way, apparently.

I don't come on here repeatedly boasting about certain activities that people feel strongly about. Tax avoidance/evasion really winds me up and I will always comment on posters like you who seem to be promoting it as a cool thing to do.

All right, Edward. That you for explaining your viewpoint. But I must argue that this thread is about working as an IC, so my post is completely relevant. I also mention my situation because it illustrates that working as an IC is not innately illegal or a stupid act. In certain situations, it can actually be more beneficial to the employer and the employee.

I can understand your point about social responsibility, but I guess we'll just have to agree to disagree. I pay as much tax as I have to legally. I don't view this as turning my back on society. I see it as a way to pay my share of the government purse while financially benefiting myself as much as possible. I see nothing wrong with that. Paying more tax than you absolutely have to seems foolish to me. You work for yourself, not the government. Pay to the government what you need to, but not any more.

As for paying medical bills when you are sick, well... I know one fellow who needed a major surgery. He worked as an IC without health insurance. His total bills for the surgery exceeded 25 million won. Fortunately, he had enough savings to cover the costs easily. I think that's fine. I'd rather pay money when I get sick than have to pay for costly health insurance that I may never use. Rather than throwing money away into insurance, it is better to take home more money each month and save and invest it. That way, you have complete control over your money and can use it when necessary.

I also mention my situation because it illustrates that working as an IC is not innately illegal or a stupid act

Actually, claiming that you are an IC when you are really employed by a company, as you do, is illegal. So when you don't pay your taxes at source you are actually just breaking the law not cleverly avoiding tax as you seem to think you are.

When I was working as an After School teacher, I was hired as an IC. This meant I legally had to pay for my own health insurance, and I needed to use an accountant to do my taxes (who insured me that being an IC was completely legal in my situation and I was audited along with my wife in 2008. We were told we owed them nothing and that our paperwork all checked out).

The benefit of being an IC was that my tax percentage was lower and my salary much higher. I signed up for it.

There's nothing illegal about it, not sure where you're getting that info from, but it's wrong (at least was a couple years ago). A lot of Koreans are hired as IC's. If it were illegal to be hired as an IC in Korea, why would there be a box to check on the tax form for it? Why would the tax office have no issue with me only paying 3.3% after my wife and I were audited? Why would the MOE sign off on it? Why would it be ok with immigration? And why, when I had a labor dispute with one of the schools I worked at, did the Labor Board mention nothing about it after studying my contract? Why when audited by the National Tax Service was I not punished for cheating on my taxes?

Don't spread false information on the internet about things you think you know about but don't..